fundamentals of actuarial techniques in general insurancematblas.com/pdf/fatgi_brochure2014.pdf ·...

Fundamentals of

Actuarial Techniques in

General Insurance A technical, yet practical, course for non-actuarial practitioners working in any area

of insurance and reinsurance. From basic statistical concepts to an overview of

capital and solvency requirements, the course provides an invaluable overview of

key areas within an (re)insurance company: pricing, reserving and capital modelling.

Sponsored by Supported by Provided by

Matβlas Actuarial consulting, training

and research

“I was unsure of exactly what to

expect from the course when

enrolling, but throughout my

attendance the excellent

presentation of the course and

extremely well thought out

homework have helped me

immeasurably to grasp a range of

the key concepts involved in

actuarial techniques in general

insurance.” Anonymous

(Spring 2011)

“Suddenly many concepts I have

come across in my 13 years of

insurance became clear. I

especially found the capital

modelling extremely useful –

even though my actuarial

colleagues tried to explain some

of the concepts to me, I did not

have the full picture.”

Jeanette Joubert, Chartis

Insurance

(Autumn 2011)

“I found the course extremely

useful. Very clear and practically

focused – certainly helped to

demystify many actuarial

concepts. Thank you []!”

Hanna Metsanvirta, Mitsui

Syndicate

(Spring 2012)

Fundamentals of Actuarial Techniques in General Insurance

Head Office: How to contact us:

MatBlas Limited Phone: 020 7510 9690

Davenport House E-mail: [email protected]

16 Pepper Street [email protected]

Canary Wharf

LONDON E14 9RP

Registered office: MatBlas Limited, Beaufort Court, Admirals Way, Canary Wharf, London E14 9XL


Foreword

Launching this course and its certification had been on the agenda of the IUA’s Education &

Training Sub-Committee for many years. In a joint effort between the IUA, The Institute and

Faculty of Actuaries and MatBlas we were able to finally bring this initiative to life in

2009...and we are extremely proud to have been chosen as the providers of the course.

In 2011, the main achievement of our joint effort with the IUA and The Institute and Faculty

of Actuaries was attaining the accreditation by the Chartered Insurance Institute both for

CPD credits and for 20 credits at Diploma Level.

Since 2009 participants have come from a wide range of disciplines (underwriting, finance,

IT, operations, legal, compliance and actuarial) and levels of experience (from graduates to

chief operating officers). For many, this was their first exposure to actuarial concepts and

techniques and for others the course provided the opportunity to gain a deeper

understanding of actuarial concepts and methods. To date, a number of delegates have

attained the certificate of competency and have done very well in the examination.

While I would like to describe how great my experience delivering this course has been, I

would rather let delegates’ feedback speak for itself. The following is a summary of

delegates’ feedback on a scale of 1 to 5 (with 5 being the most positive).

We look forward to welcoming delegates in future offerings of this course.

Yours sincerely

Ana J. Mata, PhD, ACAS

Managing Director of MatBlas

Course overview

Category Rating

Overall content/Syllabus 4.3

Clarity of ideas presented 4.1

Course material 4.2

Balance theory/practice 3.5

Case study instructions 4.3

Homework 4.0

Expectations met 4.1

Course relevance 4.2

Level of difficulty 3.9

Level of usefulness 3.7

Overall rating 4.0

“We have covered a lot in five days.

Inevitably with such a subject it fitted

between basic things that I knew and

some real gems. Overall I feel it has

delivered what it promised and will

have been of great benefit. I found the

homework very useful but very time-

consuming. It would have been good to

spend more time reviewing some of

this.”

Simon Cooper

Atrium Underwriters


This course has been designed for insurance professionals who want to acquire a better

understanding of actuarial methods and concepts and their applications to general

insurance: Rating, Reporting, Reinsurance, Reserving and Risk / Return.

Delegates will learn through a series of hands on case studies how actuarial methods apply

in various practical situations.

Course duration

The course is delivered in five non-consecutive days, with one week between sessions.

After each session delegates will complete a series of case studies as homework to

practice the learned concepts and clarify any knowledge gaps in the following session.

After the course, all delegates will receive a certificate of attendance. For those delegates

interested in attaining a certificate of competency, there will an optional marked assessment

available 2 or 3 weeks after the last module of the course.

Who is this course for?

Although the course does not assume prior knowledge of actuarial concept and methods, it

is suggested that delegates will have at least three years of experience in an underwriting

or broking role. Delegates will require familiarity (understanding what they are and / or how

they are used) of some of these basic concepts:

Claims cost

Rate changes or rate monitoring

Incurred, paid and outstanding claims

Earned and written premium

Loss ratios

This course will be most suitable for insurance and reinsurance professionals who often

interact with actuaries (internal and external) and want to:

1) Have a better understanding of what actuaries do

2) Have a better understanding of key assumptions within the actuarial modelling

process in all areas of business (rating, reporting, reinsurance, reserving and risk /

return)

3) Be able to start an actuarial analysis that would serve as the basis of discussions

with internal and external actuaries

4) Be able to perform basic pricing analysis and incorporate some of the learned

concepts in their day to day underwriting and risk selection process


This course and its certification will be most beneficial for:

Underwriting managers or heads of business units

Class or line of business underwriters

Insurance and reinsurance brokers

Reserving and modelling practitioners

Claims managers and adjustors

Finance and accounting practitioners

Self-assessment

The following self assessment will help interested delegates determine if they have the

required level of mathematical knowledge and Microsoft Excel experience to fully benefit

from this course.

Level of mathematical knowledge required

1) Do you know how to add, subtract, multiply and divide?

2) Do you know how to calculate compound interest? And if so, are you comfortable

with exponential formulae such as

3) Do you know how to calculate the area or surface of a square and a triangle?

4) Do you know how to calculate averages?

5) Given a formula (no need to understand it in detail), are you comfortable using it

with given values to arrive at an answer?

Requirements: Yes to 3 or more of the questions above.

Level of Microsoft Excel skills

1) Are you generally comfortable using Microsoft Excel for basic tasks?

2) Do you know how to perform basic operations (+, - , * , / ,^) in Microsoft Excel?

3) Are you comfortable writing function statements in Microsoft Excel, such as IF(),

Vlookup(), etc? At least, you should be comfortable following written instructions to

type such functions in Microsoft Excel.

4) Are you comfortable understanding basic formulae in Microsoft Excel that someone

else has written?

Requirements: Yes to 3 or more of the questions above.

Format

The course will require pre-course reading for delegates to become familiar with some

concepts before each session. This will allow delegates to gain an understanding of the

basic terminology and refresh concepts they may already be familiar with before the start of

each module. In class we will then focus on how the concepts are applied in practice.

The course is divided into five modules; each module is split into four sessions of 90

minutes and will feature guest speakers and lecturers. During each session, the trainer will

present basic concepts and methods, immediately followed by application to a case study.

“This course is highly recommended for

graduates with a numerate degree who

wish to pursue a career in insurance but

do not necessarily wish to take the

actuarial examinations. I started this

course during my second week of work

in the industry. Even though all concepts

both actuarial and insurance were new

to me, I was able to understand the

lectures, follow the case studies and do

the homework.”

Frank E. Blasco


For some sessions, delegates will be required to bring their own laptop computer with

Microsoft Excel© installed. All case studies will be done using Excel (no special software is

required) or a basic handheld calculator.

After each module, delegates will be given some exercises to work on before the following

session. The optional homework and solutions will be discussed during the first hour of the

following course day. Delegates will receive sample solutions for revision.

Delegates will have access to the trainer(s) in between sessions either using face-to-face

consultation hours or by submitting their questions by e-mail.

Delegates who attend at least four days will receive a certificate of attendance.

Certificate of competency (optional)

In order to attain the certificate of competency, delegates will be assessed and graded on

the topics covered. The examination will be independently set and assessed by Andrew L.

Jackson FIA.

Delegates opting for the certificate of competency will require spending time studying the

course material and practicing using the classroom and homework case studies.

All administration matters related to the exam and its certificate are handled directly by The

IUA.

Delegates who attain the certificate of competency will be eligible for 20 credits towards the

CII certification for the Diploma Level.

Venue

The course will be held in Central London (EC3 area)

Dates

Dates and fees are published on our website www.matblas.com\training

The course is limited to 10 delegates. Registration can be done online at

www.matblas.com\register.php or by e-mail [email protected]


Module 1: Basic statistics and probabilistic models

This module builds up the statistical foundation for the rest of the course. After this module,

participants will be able to:

Understand the concept of “volatility” within a statistical framework and its impact in

various insurance and reinsurance applications.

Understand the differences between families of loss distributions and their impact in the

rating process.

Understand the applications of loss distributions to insurance and reinsurance rating

Perform basic statistical analysis including graphical representation of data

Key topics covered

Random variables and probability distributions

The expected value of a random variable

Basic measures of risk

Basic statistical concepts

Mean, median, mode, variance and standard deviation

Histograms, percentiles plots

Other graphical representations

Practical estimation of moments and percentiles

Families of probability distributions, interpretation and general formulae

Practical applications

Module 2: Fundamentals of insurance rating

This module focuses the basic components of a rating model and the concept of technical

pricing and benchmarking. After this module delegates will have answers to common

practical questions including:

What is risk premium?

How are insurance rates calculated?

Ideal data needed to estimate rates

Technical price vs. benchmark price vs. market price

How to get started when putting together a benchmark pricing tool.

How to make rating models consistent.

When it comes to benchmark rates, why is consistency more important than accuracy?

Rate changes vs. rate adequacy

How to incorporate new business in the overall rate monitoring

How to assess the overall rate adequacy of a portfolio of policies.

How to link and incorporate pricing and reserving.


Key topics covered

Basics of insurance rating

o The cost of an insurance product

o From risk premium to sale price

o Loss cost, premium and loss ratio

Components of a rating model and risk classification

Components of a rating plan: rating factors vs. exposure base

Components of a rate: claim cost, expenses, commissions and profit allowance

Technical pricing and benchmark

Management reporting

Rate monitoring on renewal risks

Rate monitoring vs. rate adequacy

Rate adequacy and new business monitoring

Rate adequacy, planning and forecasting

Experience rating

Premium and exposure adjustments

Claims adjustments

Estimating the burn cost

From claims cost to premium

Loss ratio projection

Credibility of an estimate

Module 3: Fundamentals of claim reserving

The main purpose of this module is to provide delegates with an in-depth understanding of

the importance of loss reserving and how it is linked to pricing and profitability.

After this module, delegates will be able to perform basic reserving analysis, understand

key assumptions, strengths and weaknesses of each method and reconcile results between

various actuarial methods.

Key topics covered

Data requirements

Allocating losses to years depending on policy basis (claims made/occurrence)

Allocating premium to years

Data basis: calendar year, accident/exposure year and underwriting year

Reserving methods

Chain ladder

Bornhuetter-Ferguson

Average cost per claim

Brief introduction to stochastic claims reserving

Practical issues and considerations:

Dealing with reported but not reserved losses

Separating small, large and CAT losses

Impact of reinsurance

Impact of insurance reserving on reinsurers


Module 4: Fundamentals of reinsurance rating

This module presents an introduction to reinsurance and basic actuarial methods applied to

reinsurance pricing for proportional and excess of loss layers with a brief introduction to

catastrophe modelling.

After this module, delegates will be able to understand:

How a treaty may respond to the occurrence of a loss

How to adjust premium for rate changes and other exposure changes

The key assumptions and adjustments in the pricing process

How sensitive the final results are to ceding companies reserving and pricing practices

The strengths and weaknesses of each method

How to decide between various loss cost estimation methods (credibility)

How to allow for contract terms that depend on losses that have not yet been observed,

such as reinstatements

How to determine the profit margin

Key topics covered

Basics of reinsurance

Overview of various treaty structures

Understanding the treaty wording

Understanding what is covered and how the treaty responds

Data requirements

Estimating the gross loss ratio

Experience rating

Adjusting premium for rate changes and other exposure changes

Adjusting losses for claims inflation

Developing losses to ultimate (estimating IBNR)

Estimating the burn cost for excess of loss layers

Exposure rating

Risk profile presentation

Sharing the expected cost (exposure curves and ILFs)

From loss cost to premium

Using aggregate probability distributions to evaluate performance of a treaty based on

the terms and conditions (this topic builds up from the statistical foundation studied in

Module 1).

Reinstatements

Aggregate deductibles

Loss corridors

Swing premiums

Variable commissions

Underwriting net income

Evaluating profitability of a treaty


Module 5: Fundamentals of capital modelling in practice

This module presents an overview of capital requirements in general insurance, starting

with an overview of current regulatory developments that drive the minimum level of capital

requirements for insurance and reinsurance companies.

To set the scene, an invited speaker will present an overview of current regulatory

requirements and the impact of Solvency II for the insurance industry.

Delegates will also learn further applications of capital modelling techniques for

management purposes such as return on equity calculations. The module deals with topics

ranging from basic simulation techniques, through to how to build up and understand a

simple capital model.

Key topics covered

Understanding capital requirements

ICAS and Solvency II

Risk Management

Understanding sources of risk

Underwriting risk

Reserving risk

The concept of diversification

Capital modelling in practice

Measuring risk

Correlations between risks

Portfolio aggregation

Extreme events and scenario testing

Cost of capital and return on equity

Risk measures and capital allocation

The need to allocate capital


WHY Matβlas?

Matβlas Other Alternatives

Basic theory, but focus on implementation Academics – too theoretical

and interpretation.

Training is our core business: clear separation Large consulting firms:

between consulting and training services Not core services: “training” is an

avenue to market other services

(e.g. consultancy)

Implementation with available tools in

the workplace Seminars usually base on

proprietary software – further

Sample solutions and detailed reference purchase required

material. Interactive Q&A throughout.

Who we are?

Ana Mata, our managing director and founder, is a qualified actuary with broad experience

developing bespoke rating and underwriting management solutions for London market and

commercial insurance companies. Throughout her career she has seen both sides of the coin in

all areas:

Pricing experience both in insurance and reinsurance companies as well as an external

consultant.

Global experience: Ana has worked in the US and the London market (US and

international business).

Training experience: over 15 years of training experience both in academic and industry

roles.

With her candid approach to business and extensive experience working with underwriters and

actuaries, Ana is able to present the same concepts from different angles to a wide range of

insurance professionals including actuaries, underwriters, claims managers and insurance

executives.

Our experience

Our trainers are active industry practitioners with significant experience in the topic they lecture.

This allows them to provide the most relevant material and course content for today’s insurance

market. All courses relate the learned concepts and application to internal and external reporting

requirements and current industry trends.

Since our first course in 2008, we have become the leading training company in the London

market providing professional development courses with an actuarial focus to insurance and

reinsurance practitioners across all areas of practice.

Each year we train over 200 professionals in a wide range of technical topics including statistics,

pricing and underwriting management.


MatBlas Limited is registered in England and Wales under company number 6182887. VAT registration number 919 2518 12

Registered office: MatBlas Limited, 16 Beaufort Court, Admirals Way, Canary Wharf, London E14 9XL

Head office: MatBlas Limited, Davenport House, 16 Pepper Street, Canary Wharf, London E14 9RP

fundamentals of actuarial techniques in general insurancematblas.com/pdf/fatgi_brochure2014.pdf ·...

Documents